Karnataka: Low-grade iron ore prices fall to 6-month low post-NMDC price cut

• Prices under pressure after NMDC price cut
  
  
• Weak export sentiments weigh on domestic prices
  
  
• Trades remain subdued on material non-availability
  
  

Domestic low-grade iron ore fines (Fe 57%) prices witnessed a drop this week in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 3,200/t ($38/t) ex-mines Bellary, a w-o-w fall of INR 100/t ($1/t). Notably, prices are hovering at six-months low as the same levels were reported in September, 2023.

NMDC's recent price cut announcement along with bearish sentiments from export market have weighed on low-grade domestic prices, BigMint observed. Meanwhile, some miners were away from the market owing to their ECs got exhausted towards the end of this fiscal year (FY'24).

"Hearing indicative prices at these levels, however, we are not offering. Probably, we'll start offering from next fiscal year," mentioned a Bellary-based miner.

"We tried to procure low-grade iron ore (Fe 57%) but no one having the material to offer," another buyer from the region told BigMint.

Rationale:

• No trade was recorded in this publishing window and was accorded with 0% weightage.
  
  
• Thirteen (13) offers and indicative prices were reported, out of which ten (10) were considered as T2 trades receiving 100% weightage.
  
  

Factors weighing on low-grade prices:

• NMDC cuts iron ore fines prices by INR 200/t: NMDC Karnataka has announced list prices of iron ore from Donimalai mines on 27 March, 2024. Revised prices of fines (-10 mm, Fe 59%) stand at INR 3,658/t ($44/t), down by INR 201/t ($2.5/t) while lumps (10-40 mm, Fe 59%) prices are at INR 4,153/t ($50/t), up by INR 153/t ($2/t). Prices include royalty, DMF and NMET.
  
  
• Weak export sentiments weigh on domestic prices: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index remained unchanged w-o-w at $58.5/t FOB east coast on 28 March, 2024. The overseas buyers were looking for cheaper material following a sluggish import margins, which was not feasible for Indian sellers. Meanwhile, the discount has widened for Fe 57% fines.
  
  

Outlook

Domestic low-grade iron ore prices and trade in Karnataka are expected to remain under pressure owing to bearish export market sentiment. Meanwhile, the fresh EC limit from the next financial year may improve the supply side.